Legend has it that the decision to kill off Aerith in Final Fantasy VII, as well as its centring around themes of death and rebirth, was inspired by the death of Hironobu Sakaguchi's mother. While this isn't true, his feelings that death shouldn't be portrayed as clinical and sterile and 'laudable', that it should be shown as sudden, brutal, and tragic, did influence the decision of how she should be killed off, and finalized the choice to kill her other than the other choice, Barret, as it would have a greater impact on the viewer.
The final boss of Earthbound was inspired by a traumatic experience Shigesato Itoi had during his childhood, of seeing what he thought was a rape scene in a movie as a very young child. The final boss's dialogue ("It hurts... I feel... happy...") was based on dialogue Itoi recalled from the movie.
Itoi couldn't program, so he had to read off the dialogue he wrote to a friend, who typed it in. They both cried while writing Giygas.
In the same vein, Mother 3. As revealed by Itoi in an interview, the final battle in the unreleased Nintendo 64 version was going to be far darker than it is in the released GBA version (and that's actually saying something). The ending was also going to be far more ambiguous (again, saying something) and sad. He accredits the happier feel of the released game to "becoming a good person", and he was horribly stressed and depressed during the development stages of Earthbound 64.
Tattoo Assassins gave this to the entire production team. They were people working for Data East Pinball, roped into trying to create a Mortal Kombat clone with the promise of a hefty bonus...if they could deliver a fully-functional game in eight months. You can read how this project crashed and burned here. (Scroll down to the very bottom, the rest is just information about the game's concept.)
Apparently, while chapter 6 of The Way was in production, Lun, its creator, was going through some rough times.
Arc V of Master Of The Wind was also reportedly made while writer Volrath was in a deep depression. It's much sadder and more pessimistic than the series as a whole.
An Urban Legend said that the real Mike Dawson who starred in Dark Seed had one after making the game and left game design, having a Mental Breakdown. The part about leaving game design is true; however, he didn't have a mental breakdown and begun to teach game design and wrote books on computer programming. Mike Dawson's character has a complete breakdown in the sequel, but that version of Mike isn't a creator - he's just a guy who lives with his mom.
After pressure from Konami and death threats from fans, Hideo Kojima tried to make Metal Gear Solid 4 as depressing as possible. He originally wanted Snake and Otacon to be tried for war crimes at the end of the game, but the development team protested, and it got changed to a happier ending showing them retiring (which could be interpreted as another product of Kojima's frustration).
According to Masato Kato, the head writer for Chrono Trigger, Radical Dreamers was influenced by feelings of frustration he had harbored while working on the previous project - this, he claims, influenced the darker tone of Dreamers and subsequently Chrono Cross when compared to the (relatively) lighthearted Trigger.
There's been some speculation that the tone of Umineko no Naku Koro ni after Episode 5 has changed because Ryukisihi's friend had died.
